Choice of Insurance Payers to Accept is Critical to Healthcare Practices
Selection of Coverages Should Align with Business Goals
When building a healthcare practice, selections of insurance providers are among the most critical early decisions you will make, and the choices you make should align with your business goals.
What Plans Will You Accept?
Selecting health plans that your practice will accept involves an examination of your existing or anticipated patient base and an evaluation of the local health insurance providers. Here are a couple considerations:
- Are there just a few dominant payers in your practice, or is there a broad-based selection of health insurers? Limiting your practice to accepting just two or three payers could help streamline the medical billing and process; however, it also could limit your patient base and, hence, your ability to grow the practice.
- When evaluating which health insurance plans to accept, consider the percentages of patients each plan is already bringing into your practice. If 70% of your patients are with Payer A, 5% are with Payer B and the rest are with Medicare, take a hard look at Payer B and consider what they are contractually obligated to write off. If the plan obligates the doctor to write off 50% – which cannot be charged back to the patient – it may be worthwhile to discontinue accepting Payer B. You can likely fill the gap with more patients who are covered by Payer A or other insurers that have lower write offs.
- You may also want to look at the levels of coverage in the health plans offered by dominant employers. In today’s tight labor market, where employers are sweetening their benefit packages to attract the best recruits, health plans are becoming more generous than in recent years. If you are an optometrist and a local employer’s health plan covers 100% of the cost of contact lenses, you want to be sure to accept that plan.
- It’s not just a numbers game. The choice of which health plans you accept needs to align with your business goals and with the local health coverage market. If you’re in a smaller to mid-sized city where there are a few dominant employers, look at the health plans they offer to their employees. If two or three payers cover 60% of the town, you need to accept them.
If you find it overwhelming to evaluate all the local health insurers, consider hiring a healthcare practice consultant who can help you evaluate payer options.
Should I Outsource Insurance Billing?
The question of whether to outsource insurance billing depends on the size and complexity of your practice and on the capabilities of your internal staff. If you accept only one health insurance plan, there is likely no need to outsource the billing. But if you have multiple doctors and accept several plans, outsourcing the billing to a clearinghouse may be beneficial.
If you outsource the billing, you may be dealing with a medical claims clearinghouse, which is an electronic intermediary between healthcare providers and payers. Healthcare providers send their medical claims to a clearinghouse, which standardizes and screens the claims before sending them to payers. This helps avoid mistakes in medical coding and could reduce the claim processing time. If a claim contains coding errors or doesn’t meet formatting requirements, a payer could reject it, resulting in reimbursement delays as claims are cleaned up and resubmitted.
Clearinghouse services also benefit payers, in that they format claims data according to the requirements of each payer. This is where the selection of a clearinghouse matters for a healthcare practice. If you intend to accept a broad range of insurance plans from your patients, selecting a clearinghouse that works with all the available plans in your region makes sense. If you will accept only a few plans, make sure the clearinghouse you select works well with those payers.
Before deciding to outsource, consider your budget. If you keep the billing in house, you may need only one person to handle the job, so the cost of salary and benefits should be factored in. If you outsource to a clearinghouse, there will be fees, but they may be less than the cost of even a single employee.
Efficiency also needs to be considered. An in-house employee will likely need training and may need a “ramp up” period before learning the job fully. But a clearinghouse will have the experience to get through the process quickly and has familiarity with all payers’ formatting and payment requirements.
The selection of coverages your practice will accept will impact your revenue, profitability, and patient load. If you have questions about how to make this critical decision, contact your Adams Brown advisor.